According to a report by the National Post, the Canada Revenue Agency (CRA) is actively hunting for uncollected taxes on cryptocurrencies, estimating nearly $40 million (CAD 54 million) in undeclared taxes linked to digital currencies. Sahil Behal, director general of the CRA’s compliance branch, revealed that approximately 400 audits and investigations related to crypto assets have commenced, originating from the 2023-2024 fiscal year. Behal noted that the agency still faces significant challenges in educating the public about their tax obligations regarding crypto assets.
CRA's Crypto Tax Enforcement Actions
The CRA is closely tracking the U.S. Internal Revenue Service (IRS), though slightly behind its American counterpart. The IRS recently issued a draft of tax Form 1099-DA, designed to detail proceeds from brokered crypto asset transactions, noted for its comprehensive audit requirements. A tax attorney told the National Post that the CRA has been reticent in providing guidance on how to report crypto taxes. “Up until last year, maybe a bit before that, CRA had almost nothing on crypto at all. Crypto was a commodity, that’s it,” the lawyer said. “They didn’t tell you how it’s taxed, that it needs to be taxed, you need to report it … zero guidance from CRA, and that played into it. How are you supposed to know it’s taxable?” he asked.
Trudeau's Capital Gains Tax Hike Proposal
Meanwhile, Prime Minister Justin Trudeau and his party aim to raise capital gains taxes in Canada. Media coverage primarily highlights that this hike targets corporations and affluent individuals, yet anyone with CAD 250,000 ($183,000) in annual gains will be impacted. Trudeau and his party propose increasing the capital gains tax rate from 50% to 66% in the upcoming budget. A report from Bloomberg Tax suggests, “even the dead wouldn’t be spared from Canada’s capital gains hike.”
Furthermore, Bloomberg highlights a Nanos Research Group survey, which found that 45% of Canadians believe this tax increase will harm the economy and inhibit innovation. While 38% see the capital gains tax as equitable, the rest are uncertain about its effects. Concurrently, as Trudeau advances plans for higher capital gains taxes, the Biden administration in the United States is looking to double the rate. Should President Biden succeed, the capital gains tax could soar to 39.6%.
What do you think about the CRA’s probes and Trudeau’s capital gains hike proposal? Share your thoughts and opinions about this subject in the comments section below.